Irrevocable Trust Dividends State Taxation

Forum|Forum|6 years ago
February 24, 2020
2 replies
23 views

Irrevocable Non-Grantor Simple Trust domiciled in New York with Arizona rental property and investment dividends, distributing all net rent income and dividends, filing Federal, New York, Arizona tax returns.

Are dividends considered NY state income?

If all distributions go to out-of-state (CA) beneficiary, does said beneficiary have to file NY state return?

If distributions are shared between out-of-state (CA) beneficiary and NY beneficiary, does CA beneficiary have to file NY state return due to dividend income?

Lacerte Tax Planner

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Best answer by BobKamman

Are you sure you don't have to file a California return also?

Trusts

The trustee may have to file a return if the trust meets any of these:

The trustee or beneficiary (non-contingent) is a California resident
Gross income is over $10,000
Net income is over $100
The trust has income from a California source
Income is distributed to a beneficiary

qbteachmt

Level 15

You seem to have asked twice, once for Lacerte and once for ProSeries. It helps to ask for the program you are using.

Don't yell at us; we're volunteers

BobKammanAnswer

Level 15

Are you sure you don't have to file a California return also?

Trusts

The trustee may have to file a return if the trust meets any of these:

The trustee or beneficiary (non-contingent) is a California resident
Gross income is over $10,000
Net income is over $100
The trust has income from a California source
Income is distributed to a beneficiary

C

Consul1Author

Level 2

Returns were previously prepared by EA who filed only for AZ and NY and included dividends on Federal returns but did not associate them with any state specific income.

Question then is do dividends constitute NY income by virtue of the trust being domiciled in NY?

Does trust have to file CA return and MA returns annually because Trustees domiciled in each of those states?

George4Tacks

Level 15

Probably. When all else fails read the instructions and look for Who must file

MA https://www.mass.gov/doc/2019-form-2-instructions/download

BobKamman already gave you a good answer for CA.

Generally investment income is not state specific and is taxable to the resident state of the beneficiary. The beneficiaries may have to file AZ income because of the rental being sourced there.

Answers are easy. Questions are hard!

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